Providers of I.T. hardware and software are behind much of the gains in stock prices so far this year, as they’ve shown a stronger ability than other industries to withstand market volatility.

From dot-com catastrophe to safety trade.

Such is the evolving role of technology shares measured by the Nasdaq 100 Index, whose combined value has swelled by $500 billion this quarter, the most since the tech bubble peak in 2000. Computer and software makers lead the S&P 500 Index in 2017 and are favored by active managers more aggressively than any other industry, according to a model used by Sanford C. Bernstein & Co.

As in 2000, growth prospects explain much of the interest, with tech stocks offering profits that are expanding almost twice as fast as in the S&P 500.

Tech has a steady stream of earnings and less vulnerability on any given day.

A deeper looks, however, shows a less typical attraction. At a time when uncertainty over monetary and fiscal policy is escalating, tech shares also serve as a shelter with less sensitivity to both changes in taxes and interest rates.

“Tech has a steady stream of earnings and less vulnerability on any given day to whatever is and isn’t happening in terms of what’s perceived as sea changes in government policy,” said Katrina Lamb, head of investment strategy and research at Bethesda, Maryland-based MV Capital Management Inc., which oversees $600 million. “It’s traded on its own. It’s one of the cases where slow and steady wins the race.”

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In a month when equities lost steam and questions arose over President Donald Trump’s ability to enact tax cuts, tech shares were the best performing group in the S&P 500, rising 2%. It’s a turnaround from the early stage of the post-election rally, where the industry lagged partly because of perceptions that it didn’t stand to gain from Trump’s domestic-focused policy.

Technology firms already pay lower taxes than companies in most other industries, partly due to a bigger share of overseas revenue. Their average effective tax rate of 27% trails only heath-care and real estate companies in the S&P 500, data compiled by Bloomberg show.

As optimism over Trump’s agenda fades, the ability to boost earnings without the help of government policy has attracted investors. Salesforce.com Inc., a provider of cloud-based software companies use to manage and grow customer relationships, has seen its stock price increase about 20% this year, to around $82 today from $68 per share at the end of December. For its fiscal fourth quarter year ended Jan. 31, Salesforce said revenue increased 27% year over year to $2.29 billion, bringing full-year revenue up 26% to $8.39 billion.

Companies such as Apple Inc. and Microsoft Corp. are riding growing demand among businesses as well as consumers for smartphones and web-based services, with profits for the S&P 500 Information Technology Sector Index jumping 17% in the first quarter, analyst estimates compiled by Bloomberg show. That compares with 9.8% for the broader benchmark gauge.

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Adding to the allure is the group’s insulation from interest rates. While stocks of banks, real estate investment trusts and utilities have whipsawed over speculation about the Federal Reserve’s pace of tightening, tech stocks have shown little sensitivity to changes in 10-year Treasury yields over the past three years, according to Oppenheimer & Co.

“We have the most conviction owning growth areas like technology due to their exposure to a rising equity cycle and near zero correlation to interest rates,” technical analyst Ari Wald wrote in a March 25 note.

The editorial staff of B2BecNews contributed to this report.

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